“New Delhi (PTI): Indian currency may lose further ground and dollar is likely to touch Rs 50 in the next two months in the wake of global financial crisis, say exporters and economists.”
More at The Hindu.
Propaganda Nations: Brown or Green, But Not Gold…
“Oct. 9 (Bloomberg) — Confronting the worst financial crisis since the Great Depression, Gordon Brown and Henry Paulson went in different directions.
Brown, who opted to spend 50 billion pounds ($87 billion) to partly nationalize at least eight British banks, took the most direct route to shore up the system. The U.K. prime minister’s approach contrasts with the one taken by U.S. Treasury Secretary Paulson, who crafted a more complicated $700 billion plan to buy financial firms’ bad debts. Yesterday, Paulson signaled he may follow and invest directly in banks.
“The U.S. is just less predisposed toward nationalization than all the European countries,” said Joseph Mason, a professor at Louisiana State University in Baton Rouge who used to work at the Treasury’s Office of the Comptroller of the Currency. He praised the British plan as more straight-forward. “I just think they’re way ahead,” he said.
Brown’s plan returns his Labour Party to its roots, reflecting post-World War II policies of taking ownership of industries ranging from airlines to mining. Margaret Thatcher‘s Conservative government reversed those policies in the 1980s, and they were rejected as Labour doctrine under the leadership of Tony Blair and his successor….”
Comment:
The Brown idea is nothing more than what George Soros and Paul Krugman advocate. It’s official international socialism. [Paulson’s is unofficial corporate socialism, i.e., thuggery].
No mention that Brown has nuclear energy ties, dumped Britain’s gold at the bottom of a 20 year trough in gold prices, and supported monetary intervention ala Greenspan, thus making him culpable for the boom in credit too.
Mind-Body: Making Fish Into Dragons
” At the three-tiered Dragon Gate, where the waves are high,
fish become dragons,
Yet fools still go on scooping out the evening pond water.“
Commentary from Zen Mountain Monastery:
There is a Chinese legend about a great dragon gate though which the mighty Yellow River flows, where the waves at the gate are high and the three tiers of the gate are treacherous. On the third day of the third month when the peach blossoms bloom and heaven and earth are ready, if there’s a fish that can get through the dragon gate then horns sprout on its head, it raises its bristling tail, catches hold of a cloud, and flies away becoming a dragon.
But you see, the conditions have to be right. How are the conditions made ready for us to pass through the gate? No one can predict. Yet they don’t become correct by creation, by will, or intent. When the wind of our mind ceases to blow, when the god of fire truly comes looking for fire, then “the sky can’t cover it; the earth can’t support it.”
Yet fools still go on scooping out the evening pond water.
Somebody watches as a fish leaps free of the dragon gate, is zapped by a lightning bolt, and is transformed into a dragon. Then they hurriedly run down to scoop out some of the water to drink, thinking that will make them into a dragon. It must come from deep within. We can’t live another’s life, practice another’s barriers, realize another’s true nature.
Where do you find yourself? What do you need to do before you can live and die completely, unreservedly? Who is asking? How much does it matter? What are you willing to let go of? These are the conditions. They are real and they come to life when we bring them to life. What is Buddha? Please, find out for yourself…”
Who’s to Blame: Free Market or Financialization?
“Iceland’s reinvention from the poor cousin in Europe to one of the region’s wealthiest countries dates to the deregulation of the banking industry and the creation of the domestic stock market in the mid-1990s. Those free market reforms turned Iceland from a conservative, inward-looking country to one of a new generation of internationally educated young businessmen and women who were determined to give Iceland a modern profile far beyond its fishing base.
Entrepreneurs become its greatest export, as banks and companies marched across Europe and their acquisition wallets were filled by a stock market boom and a well-funded pension system. Among the purchases were the iconic Hamley’s toy store and the West Ham soccer team.
Back home, the average family’s wealth soared 45 percent in half a decade and gross domestic product rose at around 5 percent a year.
But the whole system was built on a shaky foundation of foreign debt.
The country’s top four banks now hold foreign liabilities in excess of $100 billion, debts that dwarf Iceland’s gross domestic product of $14 billion…”
Comment:
The usual muddled and dishonest blanket indictment of the free markets will begin. But look at the facts. It was massive deregulation of one sector – banking and finance, allowing it to become the target of what amounts to predatory lending. Debt. Speculation. Possible criminality.
“The krona is suffering in part from a withdrawal by a falloff in what are called carry trades — where investors borrow cheaply in a country with low rates, such as Japan, and invest in a country where returns, and often risks, are higher.”
Icelandic bonds? Remember those? Just a while back, every investment newsletter you read was urging you to get fantastic rates of return on those bonds. What you have is interest rate arbitrage, speculators making money off the difference between interest rates. They aren’t to blame, of course. Give people an incentive, and they will act on it. But that’s the result of unrestricted printing of paper money, artificially low interest rates, and artificially abundant credit. Don’t blame the free markets.
And this gem from Jim Willie:
REALITY CHECK, INVESTMENT ALTERNATIVE: If you had purchased $1000 of Delta Airlines stock one year ago, you would have $49 today. If you had purchased $1000 of AIG stock one year ago, you would have $33 today. If you had purchased $1000 of Lehman Brothers stock one year ago, you will have $0 today. However, if you had purchased $1000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling, you would have received $214 today at redemptions. Based on the above, the best current investment plan is to drink heavily & recycle. It is called the 401-KEG Plan.
IMF: Recession through 2009
“The IMF — and many private economists — believe the U.S. economy will probably contract in the final three months of this year and the first three months of next year, meeting a classic definition of a recession. The economy’s last recession was in 2001.
The government’s bailout package is aimed at thawing lending by buying bad mortgage-related debt from troubled financial institutions. The idea is that the banks’ books would then be cleaner, putting them in a better position to lend and get the economy moving.
The IMF said this effort should help to stabilize markets but even so “the process of balance-sheet repair will be long and arduous.” Credit availability is likely to remain constrained throughout 2009, the IMF said.
Fed Chairman Ben Bernanke warned in a speech Tuesday that the economy’s outlook for this year has darkened and the pain could last for some time. His remarks were seen as foreshadowing Wednesday’s rate cut.
Looking at other countries, Germany’s growth will slow to 1.8 percent this year, down from 2.5 percent last year. France’s growth will weaken to just 0.8 percent, compared with 2.2 percent in 2007. Britain’s economy will see growth taper to 1 percent, down from 3 percent last year. Canada’s growth will tail off to 0.7 percent this year, from 2.7 percent last year.
In Japan, growth will cool to just 0.7 percent, from 2.1 percent last year.
Global powerhouses China and India will see growth clock in this year at a robust 9.7 percent and 7.9 percent, respectively. Even if those projections prove correct, they would still mark downgrades from their blistering performances last year. Russia’s economy should grow by a brisk 7 percent this year, down from 8.1 percent last year.
Inflation around the world remains high, driven up by surging energy and food prices through much of this year….”
ObamcCain: The Politics of Pose
“Will anyone ask the Democratic candidate how he feels about stoking up a replication of the Iraq disaster, with a possible war between nuclear Pakistan and nuclear India as lagniappe? The dawn of an Obama administration is now scheduled, on the candidate’s pledges, to see escalation of a doomed and pointless war in Afghanistan and perhaps also termination of Karzai, now square in Uncle Sam’s sights as a failure and probably scheduled for assassination. There’s the heritage of JFK and Vietnam for you. It’s back to 1963.
Asked if Russia was evil, just like the Soviet Union in Ronald Reagan’s eyes, Obama said yes, McCain “maybe”. Trade? Latin America? Africa? Europe? Nothing from either man, though they both agreed that they would flout the UN at will.
Of the two performances, Obama’s was the more appalling since he is meant to be the candidate of change and new ideas. He has no detectable commitment to change and no new ideas. Neither does McCain. Yet the post-debate panelists mostly claimed the Town Hall Meeting an absorbing affair, rich in content. We have one more debate, in which McCain will have another chance to reduce Obama’s commanding lead, something he failed to do last night, even though it now seems Sarah Palin did slow McCain’s slump with her performance last week. McCain and Palin are trying to get traction by slurring Obama for association with Bill Ayers, a leader of the the bomb-throwing antiwar Weathermen in the 60s. Obama was eight when they threw the bombs. It doesn’t seem a productive line of attack for McCain and Palin, particularly when many Americans wouldn’t mind blowing up Wall St themselves….”
Alexander Cockburn in Counterpunch.
Propaganda Nation: Clean Coal
“Sarah Palin and John McCain have always been for it. Joe Biden was sort of against it before he was for it and Barack Obama embraces it. To what am I referring? The alleged panacea of clean coal.
Doesn’t it make you feel all warm and fuzzy? We can have our most polluting energy source, the one that gouges our land, dirties our air with particulates, poisons our water with mercury, and generates most of our greenhouse gas emissions because it’s the cheapest, currently most abundant fuel source we have. Well hold on there, coal mavericks, you’re mistaken. Coal is a non-renewable resource. Factor in the externalities of pollution and costs to human heath, and the so-called cheap fuel source skyrockets….”
More at The Huffington Post by Simran Sethi on the bipartisan dog and pony show.
Bank Wars: Bush Is Morgan’s Man
“Developments just prior to and immediately after the bailout illuminate interesting political and potentially ominous market realities. The political reality is that George W. Bush, unlike his father, is most likely a Morgan man. Press reports indicate that W himself was involved in these transactions. Comparing the transactions shows that Morgan received the federal 800-pound gorilla’s unbridled support whereas federal coercion in the Citi-Wachovia transaction was, by comparison, restrained. In “facilitating” the JP Morgan–WaMu deal, the FDIC first wrestled WaMu to ground, executing a midnight foreclosure and repossession of all its assets. The FDIC then sold WaMu’s $302 billion in assets to Morgan for $1.9 billion and wiped out the WaMu equity holders, including a group that had invested $7 billion six months ago. Monday JP Morgan further announced that had no intention of hiring or retaining WaMu management. Wachovia was just the latest bone thrown to JP Morgan. In another federally “facilitated” transaction, on March 17, 2008 JP Morgan acquired global securities giant Bear Stearns for $236 million, or $2 a share. After shareholders complained, JP Morgan increased its “offer” fivefold, to $10 per share. In February of 2008, Bear Stearns stock had a market value $93 per share. Citi, by comparison, has not received the same level of government support. In the Citi-Wachovia transaction, the FDIC did not actually seize Wachovia’s assets. It only threatened to seize Wachovia’s assets, allowed Wachovia to survive as a legal entity and gave Wachovia until December 31 to close the deal with Citi. If W is not a Morgan man, then he is not a good negotiator, because the delay has opened the door for Wachovia to negotiate a better deal…..”
More by Bill Butler at Lew Rockwell.
Defaulted Home Loan in US = No Pension in China
“Chanting slogans “Return my blood money” and “Stealing elderly money,” protesters rallied outside the territory’s legislature building in the downtown Central financial district to urge newly elected lawmakers to investigate the sales of Lehman-backed bonds in Hong Kong.
The investors, many of them near or at retirement age, also swarmed several major banks, including Bank of China and Standard Chartered, in small groups in hopes to recoup their money.
Organizers said about 1,000 people attended the rally. Police did not offer an estimate.
Protesters accused banks that sold them Lehman-backed bonds failed to explain to them the products were linked to the bankrupt U.S. company as they thought their investment carried low risk.
“I was only told it was an investment with principal protection,” said electrical repairman Chan Hong-ming who bought $30,000 worth of Lehman-backed bonds two years ago from Bank of China.
The 50-year-old said the bank salesman had deceived him by not telling him the bonds were secured by swap obligations guaranteed by Lehman.
“The bank just cheated me … Now I don’t even know how much my investment is worth.”
Housewife Annie Ng also said she was misled by banks when she bought the $15,000 bond.
“I’d never heard of Lehman Brothers before. I wouldn’t have bought it if I knew Lehman was involved,” said the 60-year-old mother who planned to passed on the money to her children.
Billions of dollars in souring debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the U.S., to file for bankruptcy last month amid the world’s worst financial crisis in decades….”
Fed Cuts Rate as European, Asian Markets Slide Down
The Fed cut rates this morning by 50 basis points:
“Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.
Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.
Federal Reserve Actions
The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.. ..”